Scaling up climate-smart trade policy in the Pacific


  • Opinion by Sudip Ranjan Basu – Juan Rodrigo – Alexey Kravchenko (bangkok, thailand)
  • Inter Press Service

These events are a stark reminder of the increasingly severe climate events that are becoming the norm due to changing regional climate patterns in the Pacific Small Island States (PSIDS).

To address climate disasters, there is an increased need to adopt environmentally sustainable practices, including through international trade. In fact, a climate-smart trade policy means incorporating climate considerations into their trade policy.

Climate-smart trade policies are poised to play a catalytic role in enabling the PSIDS to access goods and services that can mitigate climate change. This approach can facilitate the transition to a more environmentally friendly business practice.

Using technology for climate-smart strategies

With the increasing digitization of trade processes, opportunities arise to make trade more efficient and help reduce greenhouse gas (GHG) emissions. However, the digitization of trade itself can contribute to greenhouse gas emissions, so it is crucial to balance the pros and cons of digital trade.

To mitigate these impacts, governments are increasingly adopting “climate-smart” trade policies, as highlighted in ESCAPs Asia Pacific 2021 Trade and Investment Reportprepared in collaboration with UNCTAD and UNEP.

Governments have taken measures such as tariff reductions for renewable energy technologies, digital goods and other less polluting products. In the Pacific, climate-smart initiatives such as the Trade and Sustainability Agreement aim to reduce barriers to trade in environmental goods, eliminate fossil fuel subsidies, and encourage voluntary eco-labelling programs and mechanisms.

At the national level, Samoa suspended import duties on renewable energy materials and Papua New Guinea lowered tariffs on imports of solar equipment.

In addition, the digitization of cross-border trade procedures leads to faster clearance times, more transparency and less bureaucracy. Implementing digital trade facilitation can increase competitiveness and reduce greenhouse gas emissions.

However, PSIDS have the lowest implementation rate of trade facilitation measures, with limited adoption of paperless trade measures. Only five of the twelve PSIDS have ratified the WTO Trade Facilitation Agreement, and only Vanuatu has implemented an electronic one-stop shop.

In particular, the implementation of the system in Vanuatu has led to significant environmental gains, leading to a 95 percent reduction in paper consumption, equivalent to a whopping 5,827 kg reduction in CO2 emissions and an 86 percent reduction in journeys between customs and the Biosecurity administration.

In addition, other Pacific island nations can emulate Tuvalu’s move by joining “The Framework Agreement on Facilitation of Cross-border Paperless Trade in Asia and the Pacific”. This United Nations treaty aims to encourage measures to promote digital trade, accelerating the efficiency of trade transactions, ultimately reducing emissions and promoting trade growth.

Preparing the regulatory frameworks

Despite these efforts, only a few countries with the PSIDS have developed trade strategies that take environmental considerations and climate-smart policies into account. Tuvalu is an exception, as they have incorporated “climate-smart” elements into their national trade development strategy using the Enhanced Integrated Framework (EIF) for trade-related assistance for least developed countries and ESCAP.

The situation is further complicated by persistent digital divides in the region, with low internet penetration and high costs of fixed and mobile broadband in many of the smaller PSIDS. The high cost of energy consumption in the telecommunications sector is also a major concern, with energy consumption accounting for 20 to 40 percent of telecommunications operating costs.

As PSIDS works to improve broadband coverage and access, ensuring energy efficiency in the telecommunications sector will become increasingly important for promoting climate-smart and digital commerce.

Despite the potential benefits of implementing digital trade facilitation in the Pacific, the implementation rate of trade facilitation measures in PSIDS remains the lowest among other regions at just 40.1 percent. There are also significant policy gaps in the PSIDS in areas related to e-transaction law, consumer protection, privacy data protection and cybersecurity.

By introducing these regulations, consumers, producers and merchants can transact online while securing a sustainable digital trading environment.

Promoting climate-smart and digital trade

Promoting climate smart and digital trade is crucial for PSIDS. To support this development aspiration, the following policy actions should be prioritized:

    • implement digital and energy policies to democratize access to digital services. • abolition of tariffs on climate-friendly goods/services, including renewable energy and IoT technology. • develop regulations for cross-border paperless trade and update their regulatory framework to promote digital trade. • reducing dependence on fossil fuels and abolishing fossil fuel subsidies, including in the fisheries sector. • green logistics and transport sectors with lower costs and zero-emission ships • investing in human resources for climate-smart and digital trade. • Integrate climate-smart provisions into their trade agreements.

These measures can improve the digital and energy infrastructure, competitiveness and efficiency of the PSIDS, reduce their dependence on fossil fuels and also be complemented by nature-based solutions, such as riparian zone restoration to improve carbon sequestration and the impact of to reduce tidal waves

Readers will find more details and policy recommendations in the report now available on the ESCAP website.

Sudip Ranjan Basu is Deputy Head and Senior Officer of Economic Affairs; Juan Rodrigo is ESCAP advisor and Alexei Kravchenko is an economics officer.

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© Inter Press Service (2023) — All rights reservedOriginal source: Inter Press Service

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